By Ben Evans (Economics Correspondent)
Edited by Ollie Lycett (Economics Editor)
Presently, the ruling Chinese Communist Party (CCP) is facing many domestic challenges: including a mounting debt crisis, economic stagnation, and social unrest. These have been mainly triggered by the arbitrary and entirely unachievable ‘Zero-COVID’ strategy, and the longer-term underlying issues that showed their faces during the Evergrande crisis of last year, in which China’s largest property developer defaulted on its huge debts. Whilst not fatal, they are signs of weakness for President Xi Jinping, whose social contract with the Chinese people relies upon the CCP returning the country to global dominance and prosperity. Historically, when world leaders are facing challenges at home, they look outwards, to buy themselves time and distract the electorate from the domestic woes of their administration. Putin’s horrific and unjustified invasion of Ukraine last February sent shock waves across the globe, and with Russia’s economic strength seemingly managing to withstand Western sanctions (at least for the short to medium term), the response by the Democratic World has been limited – safe to say Beijing has taken note.
China perceives Taiwan to be an extension of itself – a notion that hasn’t been directly challenged in over two decades. Therefore, it shocked many when the Speaker of the House of Representatives was the first US politician to travel to Taiwan in around 25 years. This has been perceived by many as a huge breach of the ‘status-quo’, and potentially an antagonistic move.
The issue of Taiwan is complex, and deeply rooted in an equally complex history. The Communist Revolution of 1949, led by Mao Zedong, overthrew the previously Nationalist government in China, and established the state that endures today. The previous administration was exiled to the island of Taiwan, led by Chang Kai-Shek, and after his death in 1975 it began a transition to democracy. This created a situation in which, depending on who you asked, there were two Chinese governments, with the USA supportive of the Taiwanese, capitalist administration, and the USSR supportive of the Communists on the mainland.
In the 1970s this shifted, with the US strategy of ‘détente’ under President Nixon, marked by the re-opening of communications with the CCP. In return for co-operation over Vietnam and a pledge to not assert control over Taiwan, the USA would commit to the ‘One China’ policy – a compliance that was built on in the 1990s, as President Clinton, pursued the policy of ‘strategic ambiguity’. This became the status-quo, in which the USA would not recognise Taiwan’s independence from China, yet it would support its continued democracy and free-market values.
In short, all parties (China, Taiwan, and the USA) agreed there was only one China, and that Taiwan was an autonomous territory within it. For over 25 years, this has been the case, and despite some aggressive Chinese rhetoric, it has generally been upheld. So, Speaker Pelosi’s actions and words in recent weeks have shocked many in the region, and could have significant consequences.
The significance of this region, in the context the geopolitical rivalry between China and the USA, cannot be understated, and thus the consequences of any potential conflict would have untold ramifications. Taiwan serves as a crucial demonstration of how both market based principles and democratic values exist within Chinese culture. Historically the island of Taiwan was an extremely poor, agrarian-based economy – a state unrecognisable against its modern prosperity. Taiwan’s GDP per capita, when adjusted for purchasing power parity (a rough estimation of average incomes), was projected by the IMF to be $53,429 a year in 2019 – over three times higher than China which was as low as $16,652 a year. The island’s Human Development Index, which measures educational years, life expectancy, and incomes, is extremely high at 0.916, the highest of any Chinese region. All of these stats evidence the fact that not only does Taiwan demonstrate that the Chinese people can adopt liberal political values, but that they can thrive with them. This may be disputed, considering the huge Western subsidies acting as the catalyst for this rapid development, however, the cause for Taiwan’s success isn’t entirely relevant. Its mere existence juxtaposes the growing authoritarianism of the Communist mainland regime – something that is a huge benefit to Washington, but a scarring detriment for Beijing.
This point was heavily stressed by foreign relations expert, Kishore Mahbubani, in his detailed analysis of Taiwan’s significance. With rising domestic troubles and unrest, Taiwan’s relative success only weakens Xi Jinping’s position, and for the West to achieve its objectives, this must be continued. Despite the present regime in Beijing being seen by many Chinese to have remedied the ills of poverty for millions, China’s youth are slowly turning on the CCP, favouring more liberal, forms of government.
Furthermore, there would be astronomical global repercussions from a conflict in the Formosa Straight. As of 2022, Taiwan produces 90% of the world’s semi-conductor chips, which are used in most electrical and digital goods including: cars, mobile phones, computers, and manufacturing equipment. Disruptions through any invasion would super-charge the global supply-sided issues, potentially plunging the world into a global recession, and making billions of innocent people who have nothing to do with the region dangerously worse off. Furthermore, if this fell into the hands of the Chinese, the leverage it would provide Beijing with could leave the West paralysed in future conflicts. Long term ‘self-reliance’ strategies are now becoming popular in the West (as seen by Biden’s continued push for ‘Made in America’) to reduce the industrial dependency on the region. However, in the short to medium term this is an economically delicate matter. Therefore, perhaps this more aggressive strategy is not in the best interests of either Taiwan or the USA, begging the question as to what other factors could be influencing this change in direction?
One reason for this could be the upcoming midterm elections, in which the Democrats are struggling in the polls, and desperate to maintain their fragile majorities in both Houses. With 79% of Americans having an ‘unfavourable’ view of China, it clearly pays to take a strong stance – especially considering the backdrop of the Russia-Ukraine war, and being one of the very few issues within the US political arena where there is a bi-partisan consensus among voters. Therefore, there are strong political motivations for continuing in this policy direction. So does this make a conflict inevitable if a strong stance on Taiwan is in both the interests of the Chinese and American political classes?
The short answer is no. It is plausible to assume that the US may be moving into a position of ‘strategic clarity’ over Taiwan, which is the conscious decision to make the USA’s stronger stance globally well-known. This could be seen as antagonistic, which it may well be, but there is precedent to claim that strategic clarity could enhance the chances of peace. This was used throughout the Cold War in regard to nuclear weapons, in what’s known as the theory of ‘mutually assured destruction’. Effectively, if the USA can demonstrate that the price of a conflict would inflict dramatically more pain on both sides than peace, then the political appetite for war may cease. It was this that drove the nuclear proliferation treaties of the 1970s that reduced the nuclear threat of all global powers, and potentially by raising the stakes it could force the Chinese to reduce their presence in the region.
Overall, only one thing is certain, any level of conflict over Taiwan would have apocalyptic consequences for all sides involved, especially the innocent civilians who live on the island itself. It speaks volumes about our geo-political system that in this locking of horns between the world’s two superpowers, very little attention has been given to the people of Taiwan. Sadly, in many proxy conflicts the burden is rarely placed on the dominant combatants, it’s normally those unfortunate enough to be caught in their crossfire.
Regarding the USA’s potential shift from strategic ambiguity to clarity, only time will tell the effects. Presently, it appears to have only provoked the Chinese further, as it relies upon trust – a trust in that if it came to a conflict, the USA would act, but with the nation’s constant infighting and heavy economic constraints in the region, this is uncertain. The Chinese were the world’s dominant power for over 2000 years, and this was built through a culturally entrenched scepticism of unnecessary and challenging conflicts. The ancient Chinese strategist Sun Tzu stated, ‘the supreme art of war is to subdue the enemy without fighting’. With their recent rise to economic dominance, and expansion through the relatively non-violent strategy of ‘neo-colonialism’ there’s little evidence to state the Chinese would pick a fight they can’t easily win. Especially with China’s use of ‘debt trapping’ across the developing world shifting the global diplomatic balance of power in their favour anyway, a conventional conflict may be futile to them. Thus, peace is likely to be maintained, but it is uncertain on whose terms this peace will be forged.
Comments